Kurdistan Oil & Gas Outlook DECEMB ER
2 0 1 5
C ONFIDEN TI AL
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2
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Executive Summary Kurdistan is one of few places left in the world where oil companies can acquire material exploration positions with large reserve potential on competitive commercial terms o > 11 billion BOE reserves o > 25 billion BOE prospective resources o ~ 550,000 barrels of current production; expected to reach 1 million by 2019 A number of large oil and gas discoveries over the past decade led major international oil companies including ExxonMobil, Chevron, and Total to enter the market and acquire assets Recent security threats have curtailed consolidation activity and significantly driven down asset value for local explorers and producers This undervaluation presents several unique opportunities to acquire world class producing assets for a fraction of their value The Hannam & Partners team has more than a decade of experience in successfully executing over $3 billion of transactions in Kurdistan’s oil sector
3
Source: Stratfor (map)
4
1.
The ISIS Discount
5
2.
Kurdistan Background
9
The compelling case for Kurdistan acquisitions: Call it the ‘ISIS Discount’ KRG players have outperformed the market over past five years…
…But have suffered greatly since ISIS invaded Mosul in June
1,200
160
Mkt cap ($mm) 1,035 1,050 279 59 77 38
Company Genel DNO Gulf Keystone Oryx ShaMaran WesternZagros
140 1,000 120
Cash ($mm) 474 247 68 36 58 133
Debt ($mm) 690 348 536 62 148 72
EV ($mm) 1,259 1,151 747 86 167 (23)
800 100
600
80
60 400 40
200 20
0
5
Source: S&P Capital IQ. Note: Prices rebased to Brent crude oil
Brent (59%) Genel Energy (76%) DNO (62%) Gulf Keystone Petroleum (77%) Oryx Petroleum (95%) WesternZagros (91%) ShaMaran (80%) FTSE All-Share Oil & Gas Producers Index (29%)
Nov-15
Oct-15
Sep-15
Aug-15
Jul-15
Jun-15
Apr-15
May-15
Mar-15
Feb-15
Jan-15
Dec-14
Oct-14
Nov-14
Sep-14
Aug-14
Brent (4%) Genel Energy (70%) DNO 74% Gulf Keystone Petroleum 30% Oryx Petroleum (96%) WesternZagros (84%) ShaMaran (64%) FTSE All-Share Oil & Gas Producers Index (20%)
Jul-14
Jun-14
0
Market value does not reflect the intrinsic value of Kurdish producers KRG-focused players are on average trading at discount to their core NAV and significant discount to risked NAV
Company
2015E EV/ Market Cap Total Debt Cash & Eq. EV 2P 2C P50 EV/2P EV/(2P+2C) Production Price/ Price/ Price/ Production (2P+2C+P50) ($mm) ($mm) ($mm) ($mm) (mmboe) (mmboe) (mmboe) ($/boe) ($/boe) ($/boe) Core NAV Contingent NAV RENAV (kboepd) ($/boe)
DNO ASA
1,050
348
247
1,151
484
107
124
82.5
$2.38
$1.95
$1.61
$13,952
0.33x
0.27x
0.26x
Genel Energy plc
1,039
690
474
1,263
429
1,277
3,363
95.2
$2.94
$0.74
$0.25
$13,266
0.53x
0.38x
0.29x
Gulf Keystone Petroleum Limited
279
536
68
747
348
315
198
21.8
$2.15
$1.13
$0.87
$34,329
0.38x
0.28x
0.22x
ShaMaran Petroleum Corp
77
148
58
167
12
63
n/a
n/a
nmf
$2.21
n/a
n/a
0.19x
0.17x
0.17x
Oryx Petroleum Corporation Limited
59
62
36
86
213
217
209
5.1
$0.40
$0.20
$0.13
$16,875
0.05x
0.04x
0.03x
Westernzagros Resources Ltd.
40
72
133
(21)
5
370
701
5.2
n/a
n/a
n/a
n/a
0.05x
0.04x
0.04x
Mean
$1.97
$1.25
$0.72
$19,606
0.25x
0.20x
0.17x
Median
$2.26
$1.13
$0.56
$15,413
0.26x
0.22x
0.20x
6
Source: S&P Capital IQ, company reports, broker reports
Most Kurdish producers are trading at a fraction of the value of their discoveries Market value of Kurdistan focused E&Ps
$mm
NPV estimate of Kurdistan discoveries
Total market cap: $2.5bn
Total NPV: $21.4bn $mm
1,200
4,500 4,000
1,000
Commercial Technical
3,500 800
3,000 2,500
600 2,000 1,500
400
1,000 200 500 -
7
Genel DNO Afren GKP Sinopec WesternZagros MOL Gazpromneft Oryx TAQA Oil Search Hillwood ShaMaran Crescent Dana Gas Total Marathon Maersk KNOC TKP OMV NewAge
-
Source: S&P Capital IQ, Wood Mackenzie
8
1.
The ISIS Discount
5
2.
Kurdistan Background
9
The KRG Story: Exploration successes by juniors de-risked market for major IOCs OMV
Exxon
Mala Omar Sarta Shorish
6 blocks Shamaran
Perenco Sterling
Hunt Oil Jun
2004
GKP
May
2005
Sheikh Adi
Qara Dagh
Petroquest
Miran
Taq Taq
Jan
Sindi Amedi
Heritage
Dec
2006
Sulevani Genel
DNO
Sep Oct Nov
Mar Apr Jun
2007
Feb Mar Jun
Oct
2009
2010
SepNov MarJun Jul
Addax
Taq
Oct
Oil Search
Genel
Piramagrun & Qala Dze PSCs
Hillwoo d
Hess
Dinarta Shakrok
Sarsang
Chevron
Qara Dagh
Talisman
Topkana
Gazprom Neft
Shakal / Garmian
OMV
Talisman
Kurdamir GKP
Rovi Sarta
Ber Bahr KNOC
Hawler Sangaw North Longford
Chia Surkh
Jun Jul Aug Oct Nov
Aug
2011
Jan
2012
Jul Aug
JanMarMayJun Jul Aug
Jul
2013 Dec
May
Genel
UIE
Dohuk Miran Tawke
Khalakan
Miran
Shakal
9
Jun Aug Oct
Range O&G
Sangaw North
Oil Search
Total
Baranan
Garmian
Dinatra Shakrok
Mar Jun Jul Aug
2008 Addax
OMV
Shorish
Petroceltic
Ber Bahr
Dohuk
Ain Sifni
Hess
Shakrok
Taza
Barda Rash
Niko
Kurdamir
Central Dohuk
Baranan
Sangaw North
Genel
Piramagrun Qala Dze
Westernzagros
Komet
Hawler
Sarta Rovi
Westernzagros
Corporate activity
Murphy
Bina Bawi
Norbest
Erbil Tawke
Jan
Talisman
Oil Search
GEP
Atrush
DNO
2003
Chia Surkh
Atrush Safen Sarsang Harir
Genel
Shaikan Akri Bijeel
Reliance
Shakal Pulkhana
Marathon
GKP/MOL
Licence awards
Repsol
Sangaw South Qush Tapa
Bazian
PetOil
Arbat Pulkhana
KNOC
KNOC
Chia Surkh Chevron Maersk Oil
Rovi Sarta
Sarsang Afren
Ain Sifni Barda Rash
Genel
Bina Bawi
Genel
Miran Bina Bawi
Maersk Oil Shamaran
Murphy
Atrush
Baranan
Sarsang Total
Taza
IPO
Jan
2014
Recent major discoveries show prospectivity in a largely under-explored territory Tawke
Swara Tika
708 mmbbl 100,000 b/d capacity 150,000 b/d (2015)
113 mmboe 10,000 b/d capacity 50,000 b/d (2015)
TURKEY
Tawke
Shaikan
Atrush 577 mmboe 10,000 b/d capacity 50,000 b/d (2015)
Peshkabir
639 mmbbl 40,000 b/d 2015
Swara Tika Ber Bahr Atrush Sheik Adi Summail Ain Sifni
Ain Zalah
Barda Rash 1,433 mmbbl 1,500 b/d capacity 50,000 b/d (2015)
Bijeel
Bakrman Shaikan Rovi
Bijeel
Butmah Alan
Zey Gawra
Qasab
Khurmala
Ismail
579 mmboe 80,000 b/d capacity 225,000 b/d (2015)
Miran
MakhmourQara Chauq
2,726 mmbbl 80,000 b/d capacity 250,000 b/d (2015)
Taq Taq
Khurmala
Jawan Najmah Qaiyanah
Bazian Refinery 80,000 b/d
Kirkuk
Khanuqah
Jambur
1,700 mmbbl
Daddam
IRAQ
711 mmboe Oil production 50,000 b/d (2015)
944 mmboe Prod. capacity 40,000 b/d (2015)
Kurdamir
Judaida
Miran West
Kurdamir
Kormor
Kirkuk (North Oil)
Taza
Hamrin
Chemchemal 0
25
Sarqala 190 mmboe 5,000 b/d capacity 60,000 b/d (2015)
10
849 mmboe 10,000 b/d capacity 50,000 b/d (2015)
Bina Bawi Taq Taq
Demir Dagh
Banan
596 mmbbl 3,000 b/d capacity 5,000 b/d (2015)
451 mmboe
Bina Bawi
Erbil Refinery 100,000 b/d
Ibrahim
Erbil
IRAN
Harir
Barda RashSarta Erbil Bastora Ain Al Safra
43 mmboe 5,000 b/d capacity 50,000 b/d (2015)
Source: Wood Mackenzie, IHS, Company data.
50
km 100
Ajil
Pulhkana
Shakal
Sarqala
Chia Surkh
Khor Mor 761 mmboe Oil production 20,000 b/d (2015)
Tikrit Injana
Gilabat
Khashm Al Ahmar
Qamar
Chia Surkh 250 mmboe
Exxon, Genel are largest acreage holders and may be interested to expand stake Kurdistan has emerged as a major exploration province, offering more attractive fiscal terms than the Iraqi TSCs
Currently one of the most active exploration and M&A markets in the Middle East 42 companies have taken equity interests in 51 PSCs in Kurdistan Many sizable discoveries already under development and nine fields are commercially producing The corporate landscape in Kurdistan is currently evolving with many of the pioneering small-caps being displaced by major IOCs and NOCs The award of six blocks to ExxonMobil in 2011 was significant for a number of reasons: it marked the first entry into Kurdistan by a super major, and it was the only company that also held a licences in federal Iraq Total, Chevron and GazpromNeft have subsequently followed suit by taking acreage in Kurdistan
Largest acreage holders in Kurdistan
Blocks awarded in Iraq by region
Sq.km
No. blocks
3,000
Kurdistan
Iraq
20
2,500 2,000
15
1,500 1,000
10
500 ExxonMobil Genel Gazpromneft Chevron Maersk Total Hess Repsol Calik Enerji Marathon Oryx MOL Crescent Dana Gas GKPO KNOC Talisman HKN DNO OMV Hunt Oil Murphy NewAge Oil Search Afren
-
11
Source: Wood Mackenzie
5
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
Successful discoveries have led to successful (and increasing) production 45 exploration wells drilled since 2006…
…nearly 12bn bbl discovered
Exploration and appraisal drilling in Kurdistan is steadily increasing
mmboe 14,000 12,000
Around 50 exploration wells have been drilled in Kurdistan since 2006, and the level of drilling activity will continue to grow
10,000 8,000
The high success rate (around 60%) has confirmed the region's prospectivity
6,000
Major oil discoveries include Shaikan (GKP), Tawke (DNO), Barda Rash (Afren), Atrush (Aspect) and Kurdamir (Talisman)
2,000
4,000
1930 1953 1956 1960 1978
There have also been large gas discoveries at Miran West (Genel) and Topkhana (Talisman)
…resulting in significant production growth
…and huge near-term production potential
bopd 900,000
mmboe 40,000
800,000 700,000
35,000
600,000
30,000
500,000
25,000
400,000
20,000
300,000
Reserves and resources
15,000
200,000
10,000
100,000
5,000
Tawke Field
Taq-Taq
Source: KRG Ministry of Natural Resources, Wood Mackenzie.
Dec-16
Oct-16
Other Fields
Nov-16
Sep-16
Jul-16
Shaikan
Aug-16
Jun-16
Apr-16
Khurmala-2
May-16
Mar-16
Jan-16
Khurmala Dome
Feb-16
Dec-15
Nov-15
Oct-15
Sep-15
Jul-15
Aug-15
Jun-15
Apr-15
May-15
Mar-15
0
12
2006 2007 2008 2009 2010 2011 2012 2013
NOC
Commercial
Discoveries
Yet to find
Total
Kurdistan government history frames the historic new deal with Baghdad Kurdistan Regional Government formation and challenges Iraq was established in 1920 under British rule after the defeat of the Ottoman Empire. The Kurdish homeland was divided between Iraq, Iran, Syria and Turkey From 1923, Kurds sought recognition and independence. Successive nationalist movements resulted in autonomy being granted in 1970 under a peace accord with Iraq which collapsed five years later. Physical conflict continued until the overthrow of Saddam Hussein in 2003 The new Iraqi constitution of 2005 recognized Kurdistan as a provincial region within Iraq, but key issues were left unresolved with the federal government including the KRG’s right to manage and export its oil and gas resources
The Baghdad / Erbil natural resources policy divide While Iraq has yet to pass a federal petroleum law, the KRG enacted its own law in 2007 and began signing agreements with oil companies (currently 51 licenses) against Baghdad’s wishes The KRG began exporting crude through its own pipeline system to Ceyhan, Turkey in Jan 2014, bypassing Iraq’s export system, causing Baghdad to cut the KRG off from its share of the budget
While the Iraqi government’s persistent efforts to inhibit sales deterred some potential buyers, Kurdistan exported over 300kbpd through Turkey by the end of 2014 Elections in the end of 2014 brought in a new federal government under Prime Minister Haider al-Abadi, which struck an interim settlement in November 2014 with the KRG that began the process of sharing revenue and oil export payments 13
A new Iraq government signs bipartisan agreements with KRG In December 2014, Iraq’s new prime minister, Haider al-Abadi, quickly reached a deal with Kurdish leaders to establish the framework for petroleum export logistics, oil revenue sharing, budgetary and military support. This agreement was ratified in the 2015 Iraqi federal budget, which was passed in January Kurdistan will export 550kbpd through its pipeline system to Turkey, comprising 250kbpd from Kurdish oilfields and 300kbpd from the Kirkuk field. Baghdad’s State Oil Marketing Company (SOMO) will handle crude sales The KRG will receive a 17% share of Iraq’s budget, which is currently estimated to be $17.85bn in 2015 Iraq’s Ministry of Defence will make a monthly payment to the Kurdish Peshmerga (military) to pay for salaries, training and arms for their fight against ISIS The agreement allows for the flow of weapons from the US to KRG, with Baghdad acting as the intermediary Baghdad has made two consecutive monthly budget payments to the KRG of $420m in March, $455m in April and $424m in May As production continues to ramp up, it is expected for these monthly budget payments to increase in value up to c. $1bn per month These positive developments have spurred investor interest, with the IFC receiving country clearance to invest and big banks actively holding a roadshow for a sovereign bond.
Despite threat from ISIS, security situation continues to improve with U.S. support Recent events in the region support long-term stability prospects U.S. airbase at Harir Airport
The Islamic State of Iraq and Syria, the terrorist organization with roots in the Syrian uprising, began fighting Iraqi forces in western Iraq (Anbar Province) in early 2014 In June 2014, ISIS seized the northern Iraqi city of Mosul and began threatening Kurdish territory and the capital of Erbil. This forced many oil companies operating in Kurdistan to temporarily evacuate personnel and suspend operations In August 2014, the U.S. formed an international military coalition to support Kurdish forces in the fight against ISIS, eventually pushing the insurgents back from the KRG border This proved that the U.S. and its international allies would not let insurgents gain control of KRG land An international coalition of 21 countries are supporting Iraqi and Kurdish forces in Iraq and Syria, with dozens of others providing military, humanitarian and intelligence aid The U.S. Military announced its decision to take control of Harir airport to support air operations against ISIS Ongoing military operations have forced ISIS from the Baiji Refinery, the Mosul Dam and other strategic locations throughout the region Oil companies have since remobilized staff and operations in Kurdistan, bringing production to record high levels and continuing exploration and development activities
14
ISIS Control Zones ISIS Attack Zones ISIS Support Zones Kurdistan
Regional conflict and falling oil prices led to recent macroeconomic distress… Recent events have undermined years of growth
Impact on foreign investment and trade flows
The economy of the Kurdistan Regional Government (KRG) has expanded every year since achieving its semi-autonomous status in 2005, reaching a real economic growth rate of about 8% in 2013 It is estimated that the growth rate slowed to 3% in 2014, largely attributable to the combination of the fiscal crisis and the ISIS refugee and internally displaced persons crises In the short term, the government has been able to sustain consumption but this is unsustainable in the longer term without a cash infusion
Since 2006, foreign investments and joint ventures have accounted for 23.2% of the total investment in the KRG Foreign direct investment flows have declined as operations of foreign enterprises have been adversely effected Between May and July 2014, Iraq’s exports declined by about 25% and its imports by about 45% as a result of the ISIS crisis
Approximately 25-33% of the decline in imports can be attributed to the ISIS crisis and budget crisis
The Syrian IDP crisis seems to have little impact on trade and investment
KRG GDP at current prices, 2004-2011
KRG licensed investment projects, 2006-2014
US$bn
US$mm
30
14,000
25
12,000
20
10,000 8,000
15
6,000
10
4,000
5
2,000
0
0 2004
2005
2006
2007
2008
2009
2010
Source: World Bank Economic and Social Impact Assessment Report (Feb 2015)
15
Estimated 2014 total $400 million
Payments received
US$mm
Q1 2014
Q2 2014
Q3 2014
Q4 2014
FY 2014
n/a1
n/a1
n/a1
21
21
Gulf Keystone Petroleum
-
162
-
12
28
Genel Energy
-
-
-
24
24
Amount received for oil exports
-
16
-
57
73
n/a1
n/a1
n/a1
1003
1003
Gulf Keystone Petroleum
n/a
35
n/a
n/a
1304
Genel Energy
n/a
40
n/a
n/a
2305
Amount owed to Contractors by the KRG
n/a
n/a
n/a
n/a
460
DNO
Still owed
DNO
Source: Companies’ presentations 1No export sales recognized as oil was delivered to Ceyhan in Turkey where it was held in storage 2Three payments received between May and June 2014 3HSBC estimate, not confirmed by DNO 4Company filings. 5Net trade receivable with the KRG as per Genel’s trading update from 21st January 2015
19
E&Ps debt yield analysis Issuer Name
Currency Amount ($mm) Coupon Type
Gulf Keystone Petroleum
USD
325
6.25%
Gulf Keystone Petroleum
USD
250
13.00% Senior unsecured (144A)
Gulf Keystone Petroleum
USD
250
ShaMaran Petroleum
USD
DNO Genel Energy
20
Maturity
32.49
83.26%
18-Apr-17
61.06
57.54%
21.29%
13.00% Senior unsecured (REGS)
18-Apr-17
65.52
50.60%
19.84%
150
11.50% Secured
13-Nov-18
52.31
40.71%
31.05%
USD
400
8.75%
Senior unsecured
18-Jun-20
72.7
17.75%
12.04%
USD
730
7.50%
Senior unsecured callable
14-May-19
75.55
17.19%
9.93%
Source: Bloomberg as of December 01, 2015
Senior unsecured convertible 18-Oct-17
Price (cents to the $) Yield to Maturity Current yield
Illustrative oil flow A network of pipelines has been developed since 2012, with the first pipeline from Taq Taq field to the border town of Fishbakur, completed in 2013 In January 2014, Kurdistan completed a new pipeline that ties into Turkey’s section of the Iraq-Turkey Pipeline (ITP) The pipeline network now runs 400km from Khurmala (Kirkuk) to the Turkish border where it connects with an existing link to the port of Ceyhan where oil is stored in tanks before being sold to the international market Iraq
Kurdistan
Turkey KRG control and ownership of crude
2015E capacity 1,000,000 b/d
Kirkuk
185,000 b/d
KRG pipeline
SOMO tanks
End-2015 production 150,000 b/d
Taq Taq
60,000 b/d
Shaikan
313,000 b/d
Other fields
210,000 b/d
Tawke
Total 865,000 b/d Domestic sales 120,000 b/d
Export
Tank Farm 9.5 mmbbls capacity SOMO/KRG separate storage facilities Export sales 745,000 b/d
Fishkhabour pumping station
Iraq-Turkey pipeline (ITP)
630,000 b/d KRG/Iraq oil
1,700,000 b/d capacity
Ceyhan terminal
KOMO tanks
Export
Nearly 50 KRG shipments made since Jan 2014
In December 2014, KRG agreed with Iraq’s central government a framework for petroleum export logistics, oil revenue sharing, budgetary and military support In January 2015, this agreement was ratified and passed in Iraq’s federal budget KRG will export oil through its pipeline system from Kurdish oilfields (300kbpd) KRG will transfer 250kbpd produced from its own fields to the Iraqi federal government; Anything above that 250kbpd can be sold by the Kurdish government itself In exchange, the KRG will receive a 17% share of Iraq’s budget, which is currently estimated to be $18bn in 2015
21
KRG share of oil KRG has awarded 51 Production Sharing Contracts since 2007
Example: KRG share of oil from Taq Taq & Tawke fields 1
Currently there are 12 fields with estimated 2015 year-end production of 865,000 b/d
Revenue
Taq Taq and Tawke are two of the largest fields expected to produce 360,000 b/d by end 2015 Producers sell their oil for export directly to KRG
Cost oil
Oil transported and stored in tanks at Ceyhan is sold to the international market through traders (mainly Vitol)
26,039 b/d $533m
360,000 b/d $7,350m
36,000 b/d $735m
Royalty to KRG
Profit oil
Revenue received from KRG oil sales is routed through Turkey’s Halkbank or directly to Erbil-based Kurdistan International Bank for Investment and Development (KIB)
226,589 b/d $4,634m
71,372 b/d $1,449m
The revenues from oil sales is shared between the producers and the KRG under the following terms:
Contractor share of profit oil
KRG share of profit oil
Royalty of 10% of production paid to KRG 6,849 b/d $141m
Producers recover costs subject to ceiling, normally 40-45% of revenue Remaining profit oil is shared based on contractor’s returns and varies between 13%-40% net to the contractor, with the remaining 60%-87% retained by KRG Some producers are required to pay KRG a Capacity Building Payment (CBP) out of their share of profit oil 22
1 Based
CBP payment
Contractor entitlement 90,563b/d $1,840m
KRG entitlement 269,437 b/d $5,510m
(25% of total)
(75% of total)
on $60/bbl Brent less quality discount, transport and trading costs.
With new pipelines, Kurdish production can grow exponentially A network of pipelines for oil and gas has been developed since 2012, with local company KAR Group constructing the first pipeline from the Taq Taq field to the border town of Fishbakur, completed in Q4 2013 A network of pipelines has further connected most producing fields to the town of Fishbakur In March 2013, the KRG signed an agreement with Turkey approving and regulating the transportation of Kurdish crude into Turkey The agreement sets out the rules and regulations which mirror Turkey’s standards for the import and distribution of crude oil, referred to as the Ceyhan Process. Includes independent verifications of quality and quantity The KRG created the Kurdistan Oil Marketing Organization to run the sale of all oil produced in the KRG through the pipeline infrastructure to Turkey In January 2014, Kurdistan completed a new pipeline that ties into Turkey’s section of the Iraq-Turkey Pipeline (ITP) The pipeline network now runs 400km from Khurmala to the Turkish border where it connects with an existing link to the port of Ceyhan where oil is stored in tanks before being sold to the international market Additional pipeline plans are underway, including proposed lines to transport the heavier oil produced from a number of fields to Fishkabour
One option is for a pipeline from Shaikan field directly to Fishkabour, funded by Gulf Keystone Another option is for a separate 500,000 b/d trunk line to be funded by the KRG
23
Huge potential for gas production when/if a gas pipeline to Turkey is built Kurdistan gas assets Iraq has more than 100tcf of gas reserves, with estimated yet-tofind potential of 260tcf, majority of which in the form of associated gas in the southern fields Reserves of around 23tcf of non-associated gas are located mainly in northern Iraq and Kurdistan
Kurdistan gas reserves tcf 10.0 9.0 8.0 7.0 6.0 5.0
There is huge potential for growth, especially as exploration activity has historically focused on oil targets Kurdistan is considered to be highly prospective
However, there is limited gas infrastructure and around 60% of Iraq’s gas production is flared and only 3 fields are expected to be developed till 2025
Infrastructure A gas pipeline is unlikely to be built until existing obstacles are overcome (including, but not limited to, politics, territory, law) There are a number of stranded gas fields in Kurdistan with sizeable reserves, including Miran, Bina Bawi, which together hold 12tcf of recoverable gas
4.0 3.0 2.0 1.0 -
Kurdistan gas production mmcf/d
Miran
Shaikan
1,200 1,000 800
The market is highly sceptical about the value of these resources – Heritage Oil saw c.30% drop in market value when it announced the Miran West 2 well found gas rather than oil
400
24
Chemchemal
1,400
Current operators, e.g. Genel, get no value for gas exposure by the market given that they do not offer access to export infrastructure at this stage
This makes it difficult to fund the development of these fields
Kormor
600
200 2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
It has been two years since the last significant Kurdish M&A transaction LTM price performance Deal value ($m)
Net resources (mmboe)
Implied multiple ($/boe)
Brent price ($/boe)
75% in Miran
450
428
$1.1
115
Shamaran Petroleum
20% in Taza
48
-
-
116
Genel Energy
Hawler Energy
21% in Bina Bawi
240
158
$1.5
110
Aug-12
Gazprom Neft
KRG
80% in Shakal
177
-
-
106
Aug-12
Gazprom Neft
KRG; WesternZagros
40% in Garmian
83
-
-
106
Jun-12
Total
Marathon Oil
35% in Harir & Safen
140
-
-
97
May-12
Genel Energy
Petoil
23% in Bina Bawi
175
173
$1.0
112
Jan-12
Genel Energy
KRG; Longford Energy
40% in Chia Surkh
68
73
$0.9
111
Jul-11
Afren
KRG
20% in Ain Sifni
170
192
$0.9
118
Jul-11
Afren
Komet Group
60% in Barda Rash
419
882
$0.5
118
Jul-11
Hess
KRG
64% in Dinarta & Shakrok
214
-
-
118
Oct-10
UI Energy
Genel Enerji
5% in Dohuk & Tawke, 10% in Miran
175
130
$1.3
84
Aug-10
Shamaran Petroleum
Aspect Energy
26.8% in Atrush
43
-
-
76
Jun-08
Talisman Energy
KRG; WesternZagros
40% in Blocks K44, K39
270
-
-
134
Mean
$1.0
Ann. date
Buyers
Sellers
Key Assets
Aug-12
Genel Energy
Heritage Oil
Aug-12
Total
Aug-12
Source: IHS Herold. Note: Net discovered resources, except Afren acquisition of Ain Sifni, which also includes unrisked prospective resources
25
But the market has started picking up for capital raisings Capital raised since 2005 Equity
$m
Debt
3,000
Total capital raised $7.1bn
Incl. $2.1bn Incl. $2.1bn Vallares IPO Vallares IPO (Genel) (Genel)
2,000
1,000
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
Recent debt & equity issues Equity ($m)
Debt ($m)
DNO
-
400
$400m, 5 year senior unsecured bond with a coupon of 8.75% and an issue price of 87.5% of the par value
Afren
-
348
Funds from recapitalisation of 2016 Notes, 2019 Notes and 2020 Notes
May-15
Oryx Petroleum
-
50
Apr-15
Genel
-
230
Mar-15
Gulf Keystone
41
-
$41m by issuing 85.9m shares at a placing price of 32p
Mar-15
DNO
123
-
NOK975m by issuing 73.6m shares at NOK 13.25 per share, a discount of 10% to price 1d prior to announcement
Feb-15
ShaMaran Petroleum
59
-
C$75m by issuing 713.3m shares at a price of C$0.10/share. Funds will be used for development and operations of the Atrush block
Jul-14
Oryx Petroleum
210
-
$150m sold to Addax Group; offering at 3% discount to price 1d prior to announcement
May-14
Genel Energy
-
500
Senior unsecured due 2019 at 7.50%
Apr-14
Gulf Keystone
-
250
Senior unsecured due 2017 at 13.0%
Nov-13
ShaMaran Petroleum
-
150
Senior secured due 2018 at 11.5%
Oct-13
Gulf Keystone
50
-
Tap issue of existing series of 6.25% convertible bonds due 2017
Jul-13
WesternZagros
28
-
C$30m 4.00% convertible senior unsecured notes due 2015
Jun-13
WesternZagros
69
-
C$70m 4.00% convertible senior unsecured notes due 2015
May-13
Oryx Petroleum
249
-
IPO; to fund 2013 exploration and development in Kurdistan and Nigeria
Mar-13
WesternZagros
-
58
Oct-12
Gulf Keystone
275
-
Date
Issuer
Jun-15 May-15
Source: Dealogic; Bloomberg; company data.
26
Comment
$100m facility provided by The Addax & Oryx Group. $50m drawn in May 2015 for 36 months at 10.5% $230m, 4 year senior unsecured bond with a coupon of 7.50%
6.00% senior secured loan due 2014 Senior unsecured convertible bond due 2017; to fund the appraisal of Shaikan heavy oil discovery
P SC
F ie ld
O pe ra t o r
Afren
Beuma
Chevron
Crescent
Daesung
Dana Gas
DNO
Gazprom
Genel
GKP
GS Holdings
HKN
Hunt Oil
KNOC
KRG
Maersk
Majuko
Marathon
MOL
NewAge
Oil Search
OMV
Oryx
Petoil
Samchully
ShaMaran
Sinopec
SK Innovation
Talisman
TAQA
Texas Keystone
Total
UI Energy
WesternZagros
Total
Database: KRG company asset exposure (discovered resources)
A in Sifni
Jebel Simrit
Hunt Oil
14
-
-
-
-
-
-
-
-
-
-
-
43
-
14
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
72
A kri B ijeel
B akrman
M OL
-
-
-
-
-
-
-
-
-
1
-
-
-
-
-
-
-
-
2
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
3
A kri B ijeel
B ijeel
M OL
-
-
-
-
-
-
-
-
-
9
-
-
-
-
-
-
-
-
34
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
43
A trush
A trush
TA QA
-
-
-
-
-
-
-
-
-
-
-
-
-
-
139
-
-
83
-
-
-
-
-
-
-
112
-
-
-
222
-
-
-
-
556
A trush
A trush *
TA QA
-
-
-
-
-
-
-
-
-
-
-
-
-
-
5
-
-
3
-
-
-
-
-
-
-
4
-
-
-
8
-
-
-
-
B arda Rash
B arda Rash
A fren
114
-
-
-
-
-
-
-
-
-
-
-
-
-
76
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
19 0
B arda Rash
B arda Rash *
A fren
746
-
-
-
-
-
-
-
-
-
-
-
-
-
497
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,2 4 3
B azian
B azian
KNOC
-
16
-
-
16
-
-
-
-
-
8
-
-
103
51
-
8
-
-
-
-
-
-
-
16
-
-
31
-
-
-
-
8
-
256
B er B ahr
B er B ahr
Genel
-
-
-
-
-
-
-
-
9
9
-
-
-
-
5
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
23
B ina B awi
B ina B awi
OM V
-
-
-
-
-
-
-
-
-
374
-
-
-
-
170
-
-
-
-
-
-
306
-
-
-
-
-
-
-
-
-
-
-
-
849
Chemchemal
Chemchemal
Dana Gas
-
-
-
73
-
73
-
-
-
-
-
-
-
-
-
-
-
-
18
-
-
18
-
-
-
-
-
-
-
-
-
-
-
-
18 4
Chemchemal
Chemchemal *
Dana Gas
-
-
-
107
-
107
-
-
-
-
-
-
-
-
-
-
-
-
27
-
-
27
-
-
-
-
-
-
-
-
-
-
-
-
267
Chia Surkh
Chia Surkh
Genel
-
-
-
-
-
-
-
-
150
-
-
-
-
-
50
-
-
-
-
-
-
-
-
50
-
-
-
-
-
-
-
-
-
-
250
Do huk
Summail
DNO
-
-
-
-
-
-
24
-
24
-
-
-
-
-
12
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
60
Do huk
Summail *
DNO
-
-
-
-
-
-
12
-
12
-
-
-
-
-
6
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
29
Erbil
B asto ra
DNO
-
-
-
-
-
-
40
-
-
-
-
-
-
-
20
-
-
-
-
40
-
-
-
-
-
-
-
-
-
-
-
-
-
-
10 0
Erbil
B enenan
DNO
-
-
-
-
-
-
23
-
-
-
-
-
-
-
12
-
-
-
-
23
-
-
-
-
-
-
-
-
-
-
-
-
-
Garmian
Sarqala
WesternZagro s
-
-
-
-
-
-
-
8
-
-
-
-
-
-
4
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
8
21
Garmian
Sarqala *
WesternZagro s
-
-
-
-
-
-
-
68
-
-
-
-
-
-
34
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
68
16 9
Garmian
M il Qasim
WesternZagro s
-
-
-
-
-
-
-
28
-
-
-
-
-
-
14
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
28
71
Harir
M irawa
M aratho n
-
-
-
-
-
-
-
-
-
-
-
-
-
-
47
-
-
106
-
-
-
-
-
-
-
-
-
-
-
-
-
83
-
-
236
Hawler
A in A l Safra
Oryx
-
-
-
-
-
-
-
-
-
-
-
-
-
3
4
-
-
-
-
-
-
-
14
-
-
-
-
-
-
-
-
-
-
-
22
Hawler
B anan
Oryx
-
-
-
-
-
-
-
-
-
-
-
-
-
11
14
-
-
-
-
-
-
-
46
-
-
-
-
-
-
-
-
-
-
-
71
Hawler
Demir Dagh
Oryx
-
-
-
-
-
-
-
-
-
-
-
-
-
39
52
-
-
-
-
-
-
-
168
-
-
-
-
-
-
-
-
-
-
-
258
Hawler
Demir Dagh *
Oryx
-
-
-
-
-
-
-
-
-
-
-
-
-
41
54
-
-
-
-
-
-
-
177
-
-
-
-
-
-
-
-
-
-
-
272
Hawler
Zey Gawra
Oryx
-
-
-
-
-
-
-
-
-
-
-
-
-
11
14
-
-
-
-
-
-
-
46
-
-
-
-
-
-
-
-
-
-
-
71
K39
To pkhana
Talisman
-
-
-
-
-
-
-
-
-
-
-
-
-
-
139
-
-
-
-
-
-
-
-
-
-
-
-
-
209
-
-
-
-
-
348
Kho r M o r
Kho r M o r
Dana Gas
-
-
-
107
-
107
-
-
-
-
-
-
-
-
-
-
-
-
27
-
-
27
-
-
-
-
-
-
-
-
-
-
-
-
268
Kho r M o r
Kho r M o r *
Dana Gas
-
-
-
197
-
197
-
-
-
-
-
-
-
-
-
-
-
-
49
-
-
49
-
-
-
-
-
-
-
-
-
-
-
-
493
Kurdamir
Kurdamir
Talisman
-
-
-
-
-
-
-
-
-
-
-
-
-
-
189
-
-
-
-
-
-
-
-
-
-
-
-
-
377
-
-
-
-
377
944
M iran West
M iran West
Genel
-
-
-
-
-
-
-
-
533
-
-
-
-
-
178
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
7 11
Ro vi
Ro vi
Chevro n
-
-
80
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
20
-
-
-
-
-
-
-
-
-
-
-
-
10 0
Sarsang
Swara Tika
HKN
-
-
-
-
-
-
-
-
-
-
-
42
-
-
28
20
-
23
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
113
Sarta
Sarta
Chevro n
-
-
80
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
20
-
-
-
-
-
-
-
-
-
-
-
-
10 0
Shaikan
Shaikan
GKP
-
-
-
-
-
-
-
-
-
377
-
-
-
-
236
-
-
-
101
-
-
-
-
-
-
-
-
-
-
-
25
-
-
-
739
Shaikan
Shaikan *
GKP
-
-
-
-
-
-
-
-
-
182
-
-
-
-
115
-
-
-
49
-
-
-
-
-
-
-
-
-
-
-
12
-
-
-
358
Shakal
Shakal
Gazpro m
-
-
-
-
-
-
-
194
-
-
-
-
-
-
48
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
242
Sheikh A di
Sheikh A di
GKP
-
-
-
-
-
-
-
-
-
127
-
-
-
-
32
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
15 8
Taq Taq
Taq Taq
Genel
-
-
-
-
-
-
-
-
255
-
-
-
-
-
116
-
-
-
-
-
-
-
-
-
-
-
208
-
-
-
-
-
-
-
579
Tawke
P eshkabir
DNO
-
-
-
-
-
-
18
-
8
-
-
-
-
-
6
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
32
Tawke
Tawke
DNO
-
-
-
-
-
-
389
-
177
-
-
-
-
-
142
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
708
Taza
Taza
Oil Search
-
-
-
-
46
-
-
229
31 586
230
37
12 8
8
482
11,5 15
222
25
-
-
8
5,307
T o tal Co mmercial
-
-
-
-
-
-
-
-
-
-
-
-
-
-
46
-
-
-
-
-
137
-
-
-
-
-
-
874
16
16 0
485
16
485
506
298
1,16 8
1,0 7 8
8
42
43
207
2 ,5 7 0
20
8
2 15
307
63
13 7
467
451
50
16
116
208
114
-
-
413
8
989
750
-
42
-
49
1,167
20
-
106
146
-
-
214
-
-
112
208
181
-
181
Source: Wood Mackenzie, IHS, Company data. Note: * Contingent resource in addition to the field’s commercial reserves. Other explorers in Kurdistan include: ExxonMobil, Hess, Murphy Oil, Petroceltic, Range Energy Resources, Repsol, Black Gold and Calik Enerji
27
351
Commercial reserves Contingent resources
##
-
-
-
Exploration block
##
Gas
Oil
##
Oil & Gas
21
58
